Instructions For Form 6251 - Alternative Minimum Tax - Individuals

joint return, and at least one of whose

line 30 by 28% (.28) and subtracting

1116 for the regular tax and you

parents was alive at the end of 2006.

$3,500 ($1,750 if you checked filing

previously made or are making the

status box 3, 4, or 5) from the result.

simplified limitation election, complete

Line 8 of the worksheet. Earned income

Part I and lines 14 through 16 of the AMT

includes wages, tips, and other amounts

Line 32—Alternative Minimum

Form 1116 using regular tax amounts.

received for personal services performed.

Tax Foreign Tax Credit

If the child is engaged as a sole proprietor

If the election does not apply,

(AMTFTC)

or as a partner in a trade or business in

complete Part I using only income and

which both personal services and capital

deductions that are allowed for the AMT

To see if you need to figure your

are material income-producing factors,

and attributable to sources outside the

TIP

AMTFTC, fill in Form 6251, line

earned income also includes a

United States. If you have any foreign

34, as instructed. (You will first

reasonable allowance for compensation

source qualified dividends or foreign

need to figure your foreign tax credit for

for personal services rendered by the

source capital gains (including any foreign

the regular tax and complete Form 1040,

child, but not more than 30% of his or her

source capital gain distributions) or

line 47, or Form 1040NR, line 44.) If the

share of the net profits from that trade or

losses, use the instructions under Step 3

amount on line 34 is greater than or equal

business (after subtracting the deduction

to determine whether you must make

to the amount on line 31, you do not owe

for one-half of self-employment tax).

adjustments to those amounts before you

the AMT. Enter -0- on line 35 and see

However, the 30% limit does not apply if

include the amounts on line 1a or line 5 of

Who Must File on page 1 to find out if you

there are no net profits from the trade or

the AMT Form 1116.

must attach Form 6251 to your return.

business. If capital is not an

Step 3. Follow the instructions below, if

However, even if you do not owe the

income-producing factor and the child’s

applicable, to determine the amount of

AMT, you may need to complete line 32

personal services produced the business

foreign source qualified dividends, capital

to see if you have an AMTFTC carryback

income, all of the child’s gross income

gain distributions, and other capital gains

or carryforward to other tax years.

from the trade or business is considered

and losses to include on line 1a and line 5

earned income.

If you made an election to claim the

of the AMT Form 1116.

foreign tax credit on Form 1040 (or Form

Line 31

Foreign qualified dividends. You

1040NR) without filing Form 1116, your

must adjust your foreign source qualified

If you claimed the foreign earned income

AMTFTC is the same as the foreign tax

dividends before you include those

exclusion or the housing exclusion on

credit on Form 1040, line 47 (or Form

amounts on line 1a of the AMT Form

Form 2555 or Form 2555-EZ, you must

1040NR, line 44). Enter that amount on

1116 if:

use the worksheet below to figure the

Form 6251, line 32. Otherwise, your

•

Line 53 of Form 6251 is smaller than

amount to enter on line 31.

AMTFTC is your foreign tax credit

line 54, and

refigured as follows.

•

Form 1040NR. If you are filing Form

Line 41 of Form 6251 is greater than

1040NR and you reported capital gain

Step 1. Use a separate AMT Form 1116

zero.

distributions directly on Form 1040NR,

for each separate category of income

But you do not need to make any

line 14; you reported qualified dividends

specified at the top of Form 1116. Write

adjustments if:

on Form 1040NR, line 10b; or you had a

“AMT” in the top margin of each Form

•

You qualify for the adjustment

gain on both lines 15 and 16 of Schedule

1116.

exception under Qualified Dividends and

D (Form 1040) (as refigured for the AMT,

When applying the separate

Capital Gain Tax Worksheet (Individuals)

if necessary), complete Part III on page 2

categories of income, use the applicable

or Adjustments to foreign qualified

of Form 6251 and enter the amount from

AMT rate instead of the regular tax rate to

dividends under Schedule D Filers in the

line 55 on line 31. Otherwise, do not

determine if any income is “high-taxed.”

Form 1116 instructions, and

complete Part III. Instead, if Form 6251,

•

Line 41 of Form 6251 is not more than

line 30, is $175,000 or less ($87,500 or

Step 2. If you previously made or are

$175,000 ($87,500 if married filing

less if you checked filing status box 3, 4,

making the simplified limitation election

separately).

or 5 on Form 1040NR), figure the amount

(see page 9), skip Part I and enter on the

to enter on line 31 by multiplying line 30

AMT Form 1116, line 16, the same

Note. Use your capital gains and losses

by 26% (.26). Otherwise, figure the

amount you entered on that line for the

as refigured for the AMT to determine

amount to enter on line 31 by multiplying

regular tax. If you did not complete Form

whether your total amounts are less than

Foreign Earned Income Tax Worksheet — Line 31

Keep for Your Records

1. Enter the amount from Form 6251, line 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.

2. Enter the amount from Form 6251, line 29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.

3. Subtract line 2 from line 1. If less than zero, enter as a negative amount . . . . . . . . . . . . . . . . . . . . . . . . . . 3.

4. Enter the amount from your (and your spouse’s if filing jointly) Form 2555, line 45, or Form

2555-EZ, line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.

5. Enter the total amount of any itemized deductions you could not claim because they are related

to excluded income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.

6. Subtract line 5 from line 4. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7. Combine lines 3 and 6. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.

8. Tax on amount on line 7.

}

•

If you reported capital gain distributions directly on Form 1040, line 13; you reported qualified dividends on

Form 1040, line 9b; or you had a gain on both lines 15 and 16 of Schedule D (Form 1040) (as refigured for the

AMT, if necessary), enter the amount from line 7 of this worksheet on Form 6251, line 36. Then complete the

rest of Part III of Form 6251 and enter the amount from line 55 here.

•

All others: If line 7 is $175,000 or less ($87,500 or less if married filing separately), multiply line 7 by 26%

(.26). Otherwise, multiply line 7 by 28% (.28) and subtract $3,500 ($1,750 if married filing separately) from the

result. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9. Tax on amount on line 6. If line 6 is $175,000 or less ($87,500 or less if married filing separately), multiply line 6 by 26%

(.26). Otherwise, multiply line 6 by 28% (.28) and subtract $3,500 ($1,750 if married filing separately) from the result . . . . . 9.

10. Subtract line 9 from line 8. Enter here and on Form 6251, line 31. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . 10.

-8-

Instructions For Form 6251 - Alternative Minimum Tax - Individuals - 2006 Page 8

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